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The Thin Red Line

We explore the strategic and tactical considerations behind BMW’s i sub-brand. Why did BMW attach a new BMW sub-brand to a new powertrain rather than using another brand, like Mini? The answer helps explain how innovations and brands inter-relate and how incumbents can attempt to absorb what is potentially non-sustaining.

We consider the pros and cons of innovation within an operating business – “intrepreneurship” – compared with creating an autonomous enterprise for the “new new thing”. Horace contrasts BMW i with General Motors’ failed Saturn experiment and notes that today, GM offers a mainstream plug-in car through the long serving Chevrolet brand and sales channel.

We consider the burden that regulation, girth, cycle times, legacy practices, financialization and strategy taxes place on incumbents.

Finally, we look at what it takes to cross over the line which separates the device-based nice-to-have infotainment options from the must-have driver and ownership assistants that will inevitably find home in these devices.

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I think Saturn was created in a climate of fear. GM was afraid of Honda, Toyota, VW and other imports. What may have killed Saturn is that sales in other divisions of GM gradually increased, making everyone less fearful.

Clearly Toyota and Tesla did not introduce hybrid and electric cars out of fear. BMW I’m not so sure about.

On another subject, I’m sure you’ve heard that Google users are not Google customers. Users are Google’s product, which they sell to advertisers. Note that car dealers are the customers of car manufacturers, not car owners. If a car can’t be sold to a dealer, it will not be sold to a user-driver. Tesla’s desire to get rid of dealers is a desire to serve owner-drivers better.

This is similar to how phone carriers are the customers of phone manufacturers, not phone users. If a phone can’t be sold to a carrier, it will not be sold to a user. Both car dealers and phone carriers have a lot to do with how the products look and cost, often in ways that are to the detriment of the eventual users of the products.

Tim Sweetman

Guessing: electric powertrain makes weight much more of a problem. Then, where the batteries go will affect handling, because they’re large and heavy. Diesel and hybrid-electric powertrains don’t have these design implications, and can be more readily dropped into an existing design.

Tom Van Avondt

I do not miss an episode of asymco and have been listening to asymcar occasionally , this episode however was not good and it obliges me to challenge my habit of listening .
During the episode Horace was questioning why E cars look so different , his beloved tesla, manages it to create a classic looking sports limousine.
The question was partly answered during the podcast but the way it was discussed showed that there was no preparation whatsoever.
The batteries make the car that much heavier, it would ruin any co2 equation not looking for a different approach. In the iseries the did away with all the steel and use some carbon composite ( like in formula1) for the protection of the passengers, aluminum for the chassis. This is huge but in the podcast and the comparisons with tesla it is all about the power train. A tesla is built with metal sheets . And the carbon gets even more interesting if you look what they have been doing to assure the supply of it. The carbon comes from SGL carbon , Susan Klatten , bought a minority stake , competing with the VW group for control of SGL . The production is in the us due to the low energy prices , carbon is still 10 times as expensive as steel.
Not only the weight by itself is important in designing a car , also the distribution of the weight . How can Horace wonder why not to use the free space in the now idle moto compartment .
The Leipzig plant is not newly build for the i3, it was designed by zaha hadid , originally produced the three series there.
Why to use a sub brand … The EU wants that a car maker as a brand reaches a certain g CO2 per car.
Then there was the discussion on how ugly the I3 s ( not said out loud but implied) , agree , it is an odd bird but there is an demo model at Brussels airport and it draws more eyes then an Audi A7 S , a few meters further down. But … Praising the classic beauty of the tesla model S and forgetting to dive into the I8 is rather strange . A different beast , a hybrid , but what is the engine , a 3 cylinder , 1500 cc … In a super sports car …. ( around 100k euros) , other little innovation nitbits: laser lights as an option.
Thee is so much innovation going on and we get a comparison to the Saturn . I will be listening next time and hope you guys are better prepared.

Disclaimer: I own a few BMW shares , not working for or related to BMW employees.

LTMP

Why would you stop listening when you can, instead, have a dialogue with Horace and perhaps educate him/yourself?

Tom Van Avondt

This is a great article on the Diesel engine , historical perspective. It is in German though , not my mother tongue but one can learn… If you do not master German, maybe use google translate , but I fear it is too complicated for translation .

The faz newspaper is probably one of the best newspapers in the world ?

I agree that Horace seemed rushed in this episode. Like you I noticed his comment implying that the form factor for electric engine and batteries of a car is the same as for gas engine and tank. That was surprising to hear from him.

I have read that making aluminum bodies is energy intensive, but I did not know about carbon – thanks for adding that.

Also new to me (living on the west coast of the USA) was your comment about EU regulations as an explanation of why this car keeps the BMW brand. So perhaps some of the motivation for BMW doing this “i” program is fear – fear of government fines.

As LMTP said, I encourage you to keep listening and adding value to the show via comments. Passing along good, informative automotive websites and podcasts that you know of would be appreciated as well.

Tom Van Avondt

Replying on the iPhone is not that easy , my prepared reply got unfortunately lost , this article however is a good summarization and should get Horace excited too. One footnote on the financialization
Of our economy , BMW , the company ran by accountants and strategy people is doing the crazy stuff .

Interesting that BMW is using cheap and abundant energy from the Grand Coulee Dam to make the i3. This energy source was mentioned on Asymco in regards to the ability of the US to build lots of aluminum bodied bombers during WW II.